French expert assures that the Digital Euro is a necessity

During the World Conference of Official Institutions, François Villeroy de Galhau supports the gradual implementation of the Digital Euro, highlighting its benefits for all stakeholders in the financial system

François Villeroy de Galhau, Governor of the Banque de France, told commercial bankers that the digital euro presents benefits for all concerned. During the World Conference of Official Institutions organized by the French multinational bank BNP Paribas, he stated that disintermediation is not underway.

Before addressing the topic of central bank digital currency (CBDC) for Europe, Villeroy de Galhau explained the reasons why the banking crisis at the beginning of the year did not affect the eurozone. He credited European regulation and supervision with keeping the banking system safe. However, he noted that UBS’s acquisition of Credit Suisse raised new questions about reliable crisis resolution. He mentioned that a framework for the ECB to provide “Eurosystem resolution liquidity” still needs to be established.

Villeroy de Galhau adopted a more persuasive tone when entering the “less consensual terrain” of the digital euro. He posed the rhetorical question: “If everything is going digital, why should central bank money be the only thing that remains on paper?”

He went on to explain that the digital euro would be a digital ticket, or “Cash+”. Its use would be optional, but would have the advantage of allowing the use of central bank money in electronic commerce transactions. Without him, he warned that sooner or later a crisis of confidence would arise. However, Villeroy de Galhau stressed that the digital euro would not lead to disintermediation, as central banks have no intention of opening private accounts.

The Governor of the Banque de France also highlighted that the wholesale CBDC would be a joint venture between commercial and central banks. They would share goals to encourage tokenized finance and securities, as well as facilitate cross-border interoperability.

He claimed that the digital euro would not be a competitor for commercial bank money and would help resist the advance of stablecoins, likely issued by non-European players. To the contrary, Villeroy de Galhau stated: “Our duty will most likely be to issue a CBDC, but our will is to issue it together with you, the commercial banks, and not against you.”

K. Tovar

Source: Banque-France

(Reference image source: Unsplash+)

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